ECB still assessing if lower inflation temporary: Coene

Reuters Staff

2 Min Read

BRUSSELS (Reuters) - The European Central Bank is awaiting further information, particularly signs on whether the current easing of euro zone inflation is temporary, before it acts, Governing Council member Luc Coene said.

Annual inflation in the 18-member euro zone slowed to 0.7 percent in January from 0.8 percent in December, confounding expectations of a rise and matching a four-year low hit last October.

The ECB left interest rates at record low last week, but put markets on alert for a possible move in March, when the Governing Council should have new forecasts from the bank’s staff extending into 2016.

“We have said at the last Governing Council that we wanted to have more information on a number of elements so we first need this information before we can say anything meaningful,” Coene told Tuesday’s news conference presenting the Belgian central bank’s annual report.

In comments embargoed until Thursday, Coene said the fact that euro zone inflation had fallen to 0.7 percent in January was not sufficient grounds alone to act.

Coene said the governing council needed to assess whether the slowing of inflation was simply the result of a downward adjustment of prices in euro zone periphery nations to a new equilibrium.

“Once this equilibrium is found prices will resume their normal behavior. So is it really something temporary until we have the new equilibrium or is it a real development of inflationary tendencies that is coming?” he said.

“Also the 0.7 in itself is not sufficient element to decide if we absolutely have to do something.”